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Adam Smith is back, in a surprising way, on the ideas agenda

The global economic order is under serious scrutiny. The significant economic philosopher, Amartya Sen, has put Smith back at the centre of the discussion by reminding anyone who will listen that Smith was a moral philosopher, a friend of the poor (as Malthus described him) and interested in ethical issues and the market. He disliked monopolies (particularly monopolies of land and of trade). He admitted the role of “interest” in the motivation of merchants and business people. Smith did not, as far as I can establish, use the term “self-interest” but thought of interest in prudential (hence moral) terms. Sen stresses Smith’s understanding of institutions and the need for trust: repetition and consistency through trust are important in sustaining economic life. Prudent behavior is not to be underestimated as it contains within it the idea of honest-dealing. Sen’s article may be seen at Financial Times, March 11th 2009. This blog is simply going to give a few pointers, rarely quoted, to what I would like to call the radical-conservative Smith who we rarely here about, using Smith’s own words. Smith could be pithy as well as insightful and many of his comments on the behaviors of landlords and merchants are satirical.

Here is Smith looking at laws relating to property: “Laws and government may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and to preserve to themselves the inequality of the goods which would otherwise be soon destroyed by the attacks of the poor, who if not hindered by the government would soon reduce the others to an equality with themselves by open violence. The government and laws hinder the poor from ever acquiring the wealth by violence which they would otherwise exert on the rich; they tell them they must either continue poor or acquire wealth in the same manner as they did”. Lectures in Jurisprudence iv. 23.

Here is Smith on the laboring poor and the notion of relative deprivation. Smith throughout his writings is very good on the idea of relative evaluations.: “The labour and time of the poor is in civilized countries sacrificed to the maintaining the rich in easy and luxury. The landlord is maintained in idleness and luxury by the labour of his tenents, who cultivate the land for him as well as for themselves. The moneyed man is supported his exactions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full enjoyment of the fruits of his own labours; there are no landlords, no usurers, no tax gatherers. We should expect the savage should be much better provided than the dependent poor man who labours both for himself and others. But the case is otherwise. The indigence of a savage is far greater than that of the meanest citizen of any thing that deserves the name of a civilized nation” Lectures in Jurisprudence, vi. 26.

Here is Smith on the minimum acceptable social bonds: “Society, however, cannot subsist among those who are at all times ready to hurt or injure one another. The moment the injury begins, the moment the mutual resentment and animosity take place, all the bands of it are broke asunder, and the different members of which it consisted are, as it were, dissipated and scattered abroad by the violence and opposition of their discordant affections. If there is any society among robbers and murderers, they must at least, according to the trite observation, abstain from robbing and murdering one another. Beneficence, therefore, is less essential to the existence of society than justice. Society may subsist, though not in the most comfortable state, without beneficence; but the prevalence of injustice must utterly destroy it”. Theory of Moral Sentiments II.ii.3.3

So there is much more to Smith, as Sen also argues, than his construction as the so-called author of the “bible of capitalism”.